Ethanol Blog

Brazil Implements 20% Import Tariff on US Ethanol

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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With negotiations between the United States and Brazil breaking down, U.S. ethanol producers now face a 20% import tariff when sending product to Brazil.

Since May, U.S. exports to Brazil fell to less than 4 million gallons. Conversely, Brazil has exported about 96 million gallons of fuel ethanol to the U.S.

Agriculture and biofuels groups said in a press statement on Wednesday that a 20% tariff will only "further imbalance trade between the two countries."

The implementation of the tariff had been delayed while U.S. and Brazilian officials attempted to reach an agreement. Those negotiations broke down reportedly in the past couple of weeks.

In a joint statement, leaders from Growth Energy, U.S. Grains Council, Renewable Fuels Association and the National Corn Growers Association, said the breakdown will be "devastating" to biofuels producers and farmers.

"Brazil's decision to impose a 20% tariff on all U.S. ethanol imports is devastating for the U.S. ethanol industry, the future of cooperation and coordination between our nations," the groups said.

"Not only does this decision risk destroying the great progress our two nations have made as global leaders in ethanol production, it marks a dramatic turn in our bilateral trade relationship. Today, Brazilian ethanol receives unfettered access into the U.S. market, while U.S. producers are denied reciprocal market access due to a restrictive import tariff designed solely to make U.S. product less competitive. This unjust imbalance must be addressed."

The groups said the incoming Biden administration should respond with "strength, leveraging various U.S. government tools and authorities to make it clear that protectionist barriers are unacceptable.

"However, it seems clear from today's decision that Brazil is more focused on keeping US ethanol out of Brazil than true two-way trade," the groups said.

"Through repeated dialogue with local industry and government, the U.S. ethanol industry actively sought to illustrate the negative impacts of increased tariffs on Brazilian consumers and the Brazilian government's own decarbonization goals. However, it seems Brazil is more focused on taxing imports to protect their national industry than reducing carbon emissions and developing a global industry."

American Coalition for Ethanol Chief Executive Officer Brian Jennings said he's hopeful the next administration will be able to negotiate on the matter.

"We were never big fans of Brazil's TRQ, but at least it allowed some ethanol into the country tariff-free," he said in a statement.

"While our border remains completely open to imports from Brazil, their tariff virtually closes the door to us. It wasn't that long ago that Brazil was the top export destination for U.S. ethanol. Now we are experiencing demand destruction at home and abroad. One of the most urgent priorities for USTR nominee Katherine Tai will be to sit down with her Brazilian counterparts to try and negotiate a much better outcome. Sanity must be restored to Brazil's protectionist policy toward ethanol trade."

Todd Neeley can be reached at todd.neeley@dtn.com

Follow me on Twitter @toddneeleyDTN

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